What is Commission?
Commission is a core concept in modern B2B revenue. Here is a clear, accurate definition, why it matters, and how Ardovo handles it.
Short answer
Commission is variable pay a salesperson earns based on the deals they close, usually a percentage of revenue or a rate tied to quota attainment. It is the incentive engine of most sales roles, rewarding results directly. Commission structures range from flat rates to tiered plans with accelerators for over-quota performance.
Key takeaways
- Variable pay tied to closed deals or quota attainment.
- The primary incentive in most sales roles.
- Structures include flat, tiered, and accelerated rates.
- Paired with base salary to form total compensation.
Why it matters
Commission aligns rep behavior with company revenue: reps earn more by closing more. Well-designed commission drives the right deals; poorly designed plans encourage gaming or the wrong sales.
How Ardovo handles it
Ardovo ties closed deals to commission logic so payouts trace to real bookings, and Rook can answer commission questions from the underlying deal data, reducing disputes and shadow spreadsheets.
Frequently asked questions
What are common commission structures?
Flat-rate commission pays a fixed percentage of every deal. Tiered plans raise the rate as attainment climbs. Accelerators pay a higher rate above quota. Many plans combine these to reward top performance.
What is a commission accelerator?
A higher commission rate that kicks in once a rep exceeds quota, rewarding over-performance. For example, deals above 100 percent of quota might pay 1.5 times the normal rate to motivate stretch results.